Solicitor General of New Zealand v Cleven HC Auckland M 5 Im00

[2001] NZHC 392

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY M 5 - IM00

IN THE MATTER of an application pursuant to the Proceeds of Crime Act 1991

BETWEEN THE SOLICITOR GENERAL OF NEW ZEALAND
Applicant

AND PETER WILLIAM CLEVEN
First Respondent

AND DEANE GERARD BOYDEN
Second Respondent

AND SUSAN SPICIER aka SUZIE NOAKES
Third Respondent

Hearing: 9 May 2001

Counsel: R Burns for applicant
D Jones for respondent

Judgment: 18 May 2001

JUDGMENT OF NICHOLSON J

APPLICATION

[1] The Solicitor - General has applied for orders against Mr Cleven that all the property of Mr Cleven where ever situated is not to be disposed of or otherwise dealt with by any person except that bank accounts held in the name of Mr Cleven at the Hong Kong and Shanghai Banking Corporation, namely:

[a] Account number 008-071169-016

[b] Account number 008-071169-210

[c] Account number 007-071169-261

are to be excluded from the order and the exclusion includes:

[d] Monies currently held in those accounts

[e] Further monies which may be deposited into those accounts.

The Solicitor - General also seeks an order that the Official Assignee is to take custody and control of the said property.

PERTINENT LAW

[2] The application is made under s 39 of the Proceeds of Crime Act 1991 (“the Act”), the pertinent parts of which are:

“(1) Where a person . . .

(b) Has been . . . charged with a serious offence,-

the Solicitor - General may apply to the High Court for a restraining order under section 42 of this Act.

(2) A restraining order may be sought and made in respect of -

. . .

(c) All the property of the defendant (including property acquired after the making of the order) other than specified property . . . .”

[3] The power to grant a restraining order is given by s 42 of the Act, the pertinent parts of which are:

“(1) . . . the Court may . . . by order,-

(a) Direct that the property . . . is not to be disposed of or otherwise dealt with by any person except as provided in the order; and

(b) If the Court is satisfied that it is desirable to do so, direct the Official Assignee to take custody and control of the property . . . .”

[4] The grounds for making a restraining order are provided by s 43 of the Act, the pertinent parts of which are:

“(2) Where an application under section 39 of this Act seeks a restraining order . . . against all the property of the defendant other than specified property, the Court shall not make an order against the property unless the Court is satisfied that there are reasonable grounds for believing that the defendant derived a benefit, directly or indirectly, from the commission of the offence concerned.

(5) . . . the Court may make a restraining order in respect of property whether or not the Court considers there is a risk of the property being disposed of, or otherwise dealt with, in such a manner as would defeat the operation of this Act.

(6) The Court shall not make a restraining order unless the application contains, or the applicant otherwise supplies to the Court, such information as the Court requires concerning the grounds on which the order is sought.”

OFFENCES CHARGED

[5] Mr Cleven is charged with four offences. Three are serious. The two that are more directly related to the restraining order application charge that between 1 January 1997 and 21 October 1999 Mr Cloven supplied a Class B controlled drug, methamphetamine, to others and that between 1 January 1998 and 11 January 2000, he sold a Class C controlled drug, cannabis. Other charges are that with Anthony Neho and Lawrence Cresswell, between 22 October 1999 and 11 January 2000, Mr Cleven supplied mephamphetamine to others, and that on or about 25 December 1999, together with Darren Fussey, he had cannabis in his possession. The fifth charge in the indictment is that on or about 14 December 1999 Sarah Ruru aided and abetted Mr Cleven to supply methamphetamine to others.

[6] Mr Cleven and Ms Ruru applied under s 347 of the Crimes Act 1961 for discharge on the charges. The applications were heard by Morris J. In dismissing the application, Morris J described the Crown case in his 7 March 2001 judgment, as follows:

“[2] In late October 1999 as a result of information received about possible drug dealing activities involving members and associates of the Headhunter Motorcycle Gang, the Police commenced an electronic operation codenamed Mexico. Mr Cleven is a senior member of this gang. He lives at 64 Paturoa Road, Titirangi. Mr Fussey and Ms Ruru also live there, the latter is Mr Cleven’s girlfriend.

[3] On 22 October the Police applied for an interception warrant to use listening devices (audio and telephone) to intercept the personal communications of Mr Cleven, a Mr Boyden and a named third person at 64 Paturoa Road and a second named address. The offences in respect of which the warrant was applied for and granted were ‘conspiracy to manufacture and supply methamphetamine’ and ‘manufacture and supply methamphetamine’. The application was granted and a telephone tap placed on Mr Cleven’s telephone that day. No action was taken under the warrant to install a listening device at Mr Cleven’s address.

[4] On 4 November 1999 a further application was made and granted. This was a new application and was distinct from a renewal of the prior warrant for an interception warrant to use devices (audio and telephone) to intercept the personal communications of Mr Cleven, Mr Boyden and a third person at the same address in Titirangi. The third person named in this new application and in the warrant was a different person than the third person named in the warrant obtained on 22 October. The offences in respect of which the warrant was applied for and granted were the same as in the earlier application and warrant. A telephone tap was placed in Mr Cleven’s phone. As I understand it no listening devices were installed in the address.

[5] On 2 December and 22 December 1999 renewals of the warrant issued on 4 November were applied for and granted.

[6] Operation Mexico was terminated on 11 January 2000. At all material times between 22 October 1999 and 10 January 2000 Mr Cleven lived at 64 Paturoa Road as did Mr Fussey and Ms Ruru. A number of conversations involving the accused have been recorded. Where considered relevant they have been transcribed.

[7] On termination of Operation Mexico the Police searched the Titirangi address. No drugs of any kind were found on Mr Cleven’s person or in his home. A trace only of methamphetamine was discovered on a set of portable scales found in a cupboard in the kitchen of the house at Paturoa Road. Approximately 2 grams of methamphetamine were found in the possession of Mr Neho when he was located by the Police. An amount of $12,850 in cash was found in Mr Cleven’s house.

[8] The Crown’s case is essentially one which is reliant upon intercepted conversations. That is, the intercepted conversations which took place at 64 Paturoa Road, Titirangi. It is dependent upon what is recorded as being spoken on the tapes and the meaning to be ascribed to various terms and noises heard on the tapes. The Crown proposes to lead evidence of Mr Cleven’s accumulated assets and seeks to establish through expert analysis such assets are substantial and cannot be accounted for other than being obtained from the proceeds of drug trafficking.

[9] As I understand it the Crown case in count 1, which is the most substantial charge, is that the accused Cresswell was an intermediary between a methamphetamine manufacture and Mr Cleven and made deliveries of methamphetamine to Mr Cleven. Following receipt of these deliveries Mr Cleven and Ms Ruru were involved in cutting and packing the methamphetamine and Mr Cleven was then responsible for its distribution. Both Mr Cleven and Mr Neho, it is contended, are members of the Headhunters Gang. The Crown contends Mr Neho was part of the distribution organisation.”

EVIDENCE AND SUBMISSIONS

[7] Mr Burns submitted there was ample evidence to satisfy the requirement under s 43(1) of the Act that there are reasonable grounds for believing that Mr Cleven derived a benefit from the commission of the serious offences charged. He referred to two affidavits. The first is that of Nichola Nutsford, a financial analyst employed by the Police. Ms Nutsford deposed that from analysis of documents relating to Mr Cleven and particularly bank accounts she has ascertained that for the period 1 January 1998 to 11 January 2000 Mr Cleven had total unidentified sources of funds of $228,214.40.

[8] The second affidavit is that of Detective Ronald MacMillan. He deposed that, in an intercepted and recorded telephone conversation between Mr Cleven and a female Simone on 30 November 1999, Mr Cleven said that over the years he used to deal 100 pounds of Dak a week and later told her:

“I’ve done a million dollars of this a year, and I’ve only ever lost $1,000.00 in my whole life, in all the time I’ve done it.”

[9] Detective MacMillan deposed that:

“From the conduct and background noises heard on the device, Police believe that at the time of this conversation, those present were consuming Methamphetamine, and the reference to ‘a million dollars of this’ relates to Methamphetamine. One pound a Dak (canabis) could reasonably be expected to be worth between $2-$000.”

[10] Mr Jones advised that given the Crown had given notice it intended to call evidence relating, to Mr Cleven’s financial affairs at the trial, no affidavit had been filed on behalf of Mr Cleven in opposition to the application for restraining orders as thus would compromise Mr Cleven’s right to silence. He pointed out the financial analysis prepared by Ms Nutsford only covered a limited period and no analysis had been provided for any period before this. He submitted it was common ground that Mr Cleven’s real estate position was he had purchased the Titirangi property legitimately and that no claim could be made that his equity in this property was acquired from the proceeds of crime.

[11] Mr Jones submitted that the truth of Mr Cleven’s intercepted comments referred to by Detective MacMillan was not supported by any other evidence and they have all the indications of being merely baseless bragging. He submitted the continued restraint of Mr Cleven’s property was punitive and in the event of Mr Cleven being found guilty of any of the serious drug dealing offences, the likelihood of any pecuniary penalty order being made which would exceed the value of the Titirangi property by itself was remote. He submitted that should the restraining order be retained it should be limited to the extent of the Titirangi property and lie described the request that an order relating to money or property acquired by Mr Cleven after his arrest as Draconian.

DECISION

[12] The combined effect of the evidence satisfies me on the balance of probabilities that there are reasonable grounds for believing that Mr Cleven derived a benefit from the commission of the serious offences with which he is charged. In considering Mr Jones’s submission that a restraining order of the ambit sought would be Draconian, I bear in mind the comments of McKay J in delivering the judgment of the Court of Appeal in R v Dunsmuir [1996] 2 NZLR 1, 6 that it appeared that the intention of the Act was Draconian and the statement in the judgment of Cooke P and Richardson J (as they then were) in R v Pedersen [1995] 2 NZLR 386, 391:

“Being a measure designed to deter serious crime by demonstrating emphatically that it does not pay, the Proceeds of Crime Act should be judicially administered in that spirit. In simple cases of serious drug selling the Courts should be slow to award less than the maximum penalties against sellers. This is a move in a necessary direction, involving recognition that imprisonment is not an adequate remedy for crime. From time to time this Court and other Courts have urged the introduction of remedies alternative or additional to imprisonment. See for example R v Rose [1990] 2 NZLR 552, 556. The 1991 Act is one in which Parliament has made other remedies available. In our view it behoves the Courts to use the Act as effectively as reasonably possible.”

[13] Although Ms Nutsford’s analysis shows only unexplained income of just over $200,000, a Judge may, after hearing all the evidence in the trial and submissions on an application for a pecuniary penalty order, make such an order for an amount in excess of $1,000,000. The extent of the benefit that Mr Cleven derived from the commission of the serious offences charged would be a matter for assessment if he were convicted of one or more of the serious offences charged and, being satisfied that on the evidence provided me that there are reasonable grounds for believing that he derived a benefit from the commission of the offences charged, I consider it appropriate and within the spirit of the Act to grant the application and I do so. There are orders accordingly.